Holding On To Your Good Credit Score | Credit Score

Holding On To Your Good Credit Score | Credit Score

Posted By
Weaver Law, PLLC

You have worked hard. You have been responsible, and you have paid all
of your bills in a timely manner. And now, you have been awarded with
an excellent credit rating – a credit score of 720 or higher. It
is a laudable achievement, and you have every right to be proud. But having
great credit can be dangerous – extremely dangerous.

You see, having excellent credit makes obtaining credit very easy. Sometimes
too easy. And for the unwary, it can lead to an overload of debt that
undermines all of the effort that went into achieving that credit rating.

Here is how it works: We live in a society that tells us that we don’t
need to wait in order to have the better things in life. We can have it
now simply by charging it, whether it’s a new car, a house full
of new furniture, new appliances, fancy jewelry, or any number of other
consumer goods. The big department and specialty stores offer their own,
store-dedicated credit accounts that they are anxious for credit-worthy
consumers not only to open, but to use – frequently. The banks and
credit card companies send solicitations through the mail telling you
that, due to your excellent credit history, you are PRE-APPROVED for their
credit cards.

Many people simply say, “Why not?” And so they send in the
pre-approved application, obtain their card, and begin using it. Before
long, the credit-worthy consumer is the proud owner of sometimes more
than a dozen credit cards and other credit accounts. And as the consumer
realizes that there is nothing he or she cannot acquire – simply
by swiping that plastic card – purchases begin to mount. And so
does the debt.

Often times, the consumer finds himself/herself overwhelmed in debt and
begins making the “minimum payment” on his or her credit card
accounts. And that is exactly what the department/specialty stores, credit
card companies and their sponsoring banks want you to do, because they
receive exorbitant interest on those balances. Moreover, making the minimum
payment has little effect on the principal amount on the account, as most
of it goes to pay the interest.

Unfortunately, too many people don’t curb their spending habits,
even after finding themselves deeply in debt. And so the balances increase.
The minimum payments increase. And pretty soon, credit scores begin to
plummet, even if the minimum payments are being faithfully made, because
the account balances are at a much higher percentage of the credit limit
than is required to maintain an excellent credit rating.

So be careful with your credit score. Limit the number of credit cards
to no more than five. Keep you credit card balances at 30% or less of
the credit limit on any given card. And most importantly, exercise restraint
in your spending.

For those who have achieved an excellent credit rating, congratulations.
Protect it. For those who have not yet achieved that goal,
call The Weaver Law Firm, P.C. for information about how we can help.